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Menlo Park hikes developer fees

by Sean Howell

Menlo Park's City Council looks set to approve an ordinance Tuesday, Oct. 6, that would in many cases greatly increase fees paid by real estate developers for traffic mitigation.

The fees go toward improving traffic flow and carrying out other measures to soften the impacts of additional traffic generated by new development. On projects that require City Council approval, the council can still choose to levy additional traffic fees on developers.

Commercial developers would pay anywhere from 83 cents to $8.98 per net additional square foot, depending on how the space is used. Previously, the city had charged $1.60 per square foot for commercial space.

While the consultant's study had indicated that developers should pay $6.39 per square foot for retail space, and $16.50 per square foot for restaurants, the City Council dropped both those rates to $3.87 per square foot, with council members saying they didn't want to discourage shop owners and restauranteurs from opening.

Builders of new houses will pay $2,623, while apartment or condominium developers will pay $1,610 per unit — up from a flat fee of $708 per residential unit.

"The (new) fees are relatively high, but as a community, in general we're not out to attract a whole bunch of new development," said Councilman John Boyle.

Transportation Manager Chip Taylor said the city hasn't received any complaints from local developers.

According to the consulting firm that prepared the report, the city will need to do $39.5 million worth of work by 2030 on intersections, sidewalks, transit systems, traffic signals, traffic "calming," and bicycle circulation, in order to complete efforts planned by the city to build sidewalks and bike lanes, and to mitigate current and projected traffic issues.

Developers would contribute a total of $22.4 million, with the city pitching in $16.8 million, and grants making up the rest. The city is not obligated to spend anything, according to Mr. Taylor.

Behind schedule

While the city will be responsible for funding most of the bicycle circulation and sidewalk improvements, developers are required to fund all future intersection improvements, Mr. Taylor said.

The city, however, is on the hook for $7.9 million in improvements to intersections that are already "deficient."

Why haven't developers already covered that?

Part of the reason is that Menlo Park's rates have fallen far below those charged by similarly sized local jurisdictions, according to information provided by the city. While Mr. Taylor thinks the city should update its fees every five years, Menlo Park fees have not changed since 1995.

Along with most of the city management responsible for overseeing city fees, Mr. Taylor only began working for the city recently.

"We are certainly behind as far as getting (the new fee schedule) developed," he said.

"At least now we've got a model, that says, gee, we've been undercharging," Mr. Boyle said. "These projects do create a lot of traffic, and if we haven't been collecting sufficient fees to pay for it, we've got to dip into reserves or figure out something else."

A separate fee study completed in 2008 revealed that the city had only been charging developers about half of what it costs the city to process development applications, leaving taxpayers on the hook for about $600,000 per year.